KJZZ interview transcript – The Role of States in International Trade

KJZZ Radio’s “The Show”terviewed Executive Director Erik Lee about the role of states in international trade. Below is the transcription of the interview by KJZZ’s Mark Brodie. You can find a link to the audio of this interview at: http://kjzz.org/sites/default/files/07-13-17s-lee.mp3

KJZZ: Governor Doug Ducey is in Providence, Rhode Island today. It is the first day of the National Governors Association Summer Meeting. Ducey will be taking part in a panel called “States’ Role in Attracting International Investment with the governors of Nevada, Virginia, and Rhode Island. So we wanted to look at how states are looking to boost their foreign trade. And for that we turn to Erik Lee, Executive Director of the North American Research Partnership. And Erik what strategies are states using when it comes to working more with foreign countries?

Erik Lee: I think the first strategy is to talk a good game on trade. I think you hear this from a number of governors around the country who are very aware that global trade, not just NAFTA trade, but global trade can bring benefits. It brings drawbacks as well but it can bring big benefits, particularly to large metro areas in terms of an increased number of jobs in the export sector, and these jobs tend to pay more. And those folks, with those jobs, tend to pay more taxes into local and state coffers.

KJZZ: For how long has this been going on? For how long have states really been looking to boost foreign trade?

Lee: Well, just here in Arizona, the Arizona-Mexico Commission has that kind of economic exchange at the heart of what it is trying to do, and that organization is over fifty years old. So governors have been aware of the importance of trade for quite a while. Now they also have to work with mayors of large and medium sized metro areas in their states, and trade has to land somewhere. So at the end of the day, it’s really mayors and local economic development people who really have to land this economic activity, to really make it happen.

KJZZ: You mentioned governors looking to mayors and other city officials, but I’m wondering if there are instances of states, not necessarily running afoul of federal trade laws or rules or anything like that, but maybe there is some level of conflict between what the federal government is trying to do on trade and what the states are trying to do on trade.

Lee: The irony of the Trump Administration’s pushing of an aggressive renegotiation of NAFTA, with their thinking being that Mexico and Canada are somehow taking advantage of the US, is that I would say for the vast majority of state governors the thinking is completely, 180 degrees the opposite. At this point, I think that state agencies, city governments, economic development professionals, are sufficiently up to date on what the statistics are, how important this trade is for their communities, and they talk to state governors on an ongoing basis. So I think there is that to keep in mind.

KJZZ: How important is geography in a state being able to foster trade and maybe with whom a state fosters trade with? Obviously Arizona and Mexico have a very strong trade relationship, they share a border, but does it work the same way with Washington state and Canada or some of the other northern states and Canada?

Lee: Absolutely. These states do think of themselves as containing megaregions that are important to the economic development of not just the United States, but Canada as well. Geography is really important. The other way geography is important is in terms of where industries tend to locate. Arizona, ironically, has quite a challenge even as a border state. Its geography is in some ways a blessing and in some ways a curse. It’s a blessing in terms of being next door to Mexico and for having a long term familiarity with Mexico. It’s tough being next door to California, where so many Mexican businesspeople are focused on entering the US market, and being close to Texas.

KJZZ: I wanted to ask you about the competition factor between states within a single country. And you reference all the various Southwestern border states that are all competing with each other to get business with Mexico. It sounds like it is a fairly competitive environment.

Lee: It is an extremely competitive environment. As I said at the end of the day, I think it really comes down to mayors and their economic development people in terms of going out and talking to their business partners in Mexico and Canada, and getting them to invest or getting them to locate their operations in a given community.

KJZZ: Can you foresee a time, or maybe this is already in fact happening, when foreign countries are looking more to individual states to trade with as opposed to a unified policy with the entire country.

Lee: I think that is already happening. I think that’s been the case with both Mexico and Canada for quite some time. The folks they have there in the trade agencies, at the federal, state, and provincial levels are very, very savvy about the US market. Very, very focused on places like Silicon Valley, the industrialized Northeast. Southern states, which now have the Tennessees and Alabamas of the world, that have a lot of automotive operations, very focused on those areas. I think a few weeks ago the New York Times had a really interesting story on the fact that Canada’s trading outlook and strategy, vis-a-vis the United States, has really shifted from the federal level to the state and local level.

KJZZ: Erik Lee is the Executive Director of the North American Research Partnership.